Archive for category: SOCIALIST APPEAL

Published in October of last year, at the height of the second wave in Britain, Grace Blakeley’s The Corona Crash provides an illuminating perspective on how the pandemic will change global capitalism in the years ahead.

To understand the capitalist system’s potential future, however, Blakeley correctly looks to the past. After all, as the author notes, and as the Marxists have pointed out previously, COVID-19 is not the ultimate cause of the current crisis. Capitalism was in a quagmire before the pandemic. And it will continue to stagnate and decline even after (if) the virus is vanquished.

“The severity of the pandemic-induced recession is at least in part a result of the pre-existing vulnerabilities of the global economy,” Blakeley asserts, highlighting the slow growth, ballooning debts, and increasing inequality seen worldwide in years prior to the coronavirus crisis.

Blakeley, a prominent economic commentator on the Left, draws attention to the “unprecedented economic interventions” by governments and central banks seen over the last year – “not to help the most vulnerable through the crisis, but to save capitalism from itself.”

This is exactly the purpose of Keynesian policies, as we have explained elsewhere. Keynesianism is an economic doctrine designed to defend the interests of the capitalist class, not the working class; a (futile) attempt to manage the system and “save capitalism” from its own contradictions.

State monopoly capitalism

Blakeley astutely notes, however, that such life support from the state is nothing new. This was already present before the ‘corona crash’, in the form of quantitative easing and other ultra-loose monetary policies.

And throughout history, despite their supposed admiration of the ‘free market’, the capitalists have always looked to the state at the first sign of trouble – as was seen in 2008, when the major financial corporations, deemed ‘too big to fail’, were bailed out by governments across the world.

The result today, the author asserts, is that we in fact live in a system of “state monopoly capitalism”: one in which the boundaries between governments, the banks, and big business have become increasingly blurred; where wealth and production is ever-more concentrated; and where the capitalists, Blakeley remarks, “have collapsed into the arms of the state, and appear set to become wholly and permanently reliant on it”.

Planning – in whose interest?

As we have also discussed previously, Blakeley highlights how this modern form of capitalism is essentially a planned economy, “except that the planning that is taking place is neither democratic nor rational”; planning not by-and-for the working class, but by “central bankers, senior politicians, and their advisors in big business and finance”.

The writer continues with a pertinent warning to the Left:

“We cannot fall into the trap…of believing that a quantitative increase in state activity somehow affects a qualitative shift from capitalism to socialism. Instead, we must concern ourselves with how state power is being used – and who is wielding it.”

Blakeley follows this with an extremely apt quotation from Lenin, in State and Revolution:

“The bourgeois reformist view that monopoly capitalism or state-monopoly capitalism is no longer capitalism, but can already be termed ‘state socialism’ or something of that sort, is a very widespread error…

“But however much of a plan they may create…we still remain under capitalism – capitalism, it is true, in its new stage, but still, unquestionably, capitalism.”

This reformist “error” is indeed “very widespread” – particularly so today in the left milieu that Blakeley and similar ‘trendy’ commentators inhabit.

Systemic crisis

Throughout her new book (in reality, an extended essay), Blakeley does a commendable job of largely avoiding the superficial reformist analysis that typically permeates such circles.

At the same time, she steers clear of the postmodernist view of history, as epitomised by the recent documentaries of Adam Curtis, which presents a disjointed ‘narrative’ of isolated events, ‘great’ individuals, and random historical ‘accidents’.

Instead, Blakeley connects the dots and draws out the economic and political processes that have led from the postwar boom, to the world crisis of the 1970s, to the financialisation of the 80s, to the globalisation of the 90s, to the 2008 slump, to the current ‘corona crash’.

Quoting Marx, for example, Blakeley explains how both concentration and crisis are inherent tendencies within capitalism; phenomena that result from the “immanent laws of capitalist production itself”; processes that logically arise from an economic system based on private ownership, competition, and production for profit.

Falling into the trap

Having come so far, however, the author unfortunately slips at the final – most important – hurdle, when it comes to outlining the way forward.

Blakeley rightly points the finger at capitalism as a whole, and openly calls for socialism, asserting that:

“Socialism does not simply mean expanding the size of the capitalist state. Socialism means taking power away from the ruling classes – senior politicians, business owners, and financiers – and handing it back to the people.”

“In order to achieve this goal,” Blakeley continues, “it is not enough to demand a bigger state – the nature of the state, and of all our economic and political institutions, must be fundamentally transformed…”

But exactly what this goal looks like – and, most importantly, how we are to achieve it – is left hanging. Instead, the writer slips into vague formulations about “democratic public planning of economic activity” and “the people”, blaming “neoliberalism” and calling for a “Green New Deal”.

This latter demand, however, is an allusion to precisely the same Keynesian state-regulated capitalism that Blakeley earlier warns is a reformist “trap” that the Left must avoid.

Need for revolution

Instead of this woolly reformism, the Left needs to fight for clear and bold socialist policies. We must demand nationalisation of the ‘commanding heights of the economy’, to be run under workers’ control and management.

Above all, we must not be afraid to say the words that Blakeley and her self-conscious, vogue peers dare not utter: We must organise to overthrow capitalism. We need a revolution.

‘The Corona Crash: How the Pandemic Will Change Capitalism’ by Grace Blakeley is available now from Verso Books.

The Office for Budget Responsibility has issued a warning that up to 40% of the loans given out under the government’s ‘Bounce Back Loan Scheme’ could default.

Around £33bn has already been lent out on this scheme, which sees small businesses given state-backed loans of up to £50,000, with minimal checks on their ability to repay. A further £20bn is expected to be lent over the next few months.

These businesses are crushed between two millstones: the big monopolies on side, whose vast economies of scale allow them to dominate the market; and collapsing consumer demand on the other. With 650,000 jobs already lost since the coronavirus crisis began, and millions more furloughed workers bracing for redundancy, the market is rapidly vanishing.

Even before the recent slump, the reality is that many of these companies have been kept afloat thanks to credit. Small-business owners have borrowed more and more just to stay above the waterline.

These are the so-called ‘zombie’ companies of capitalism: neither dead nor alive, but maintained in a state of limbo by a constant injection of cheap credit.

Heads we win, tails you lose

Whilst the banks make a killing on the interest charged in the short term, many of these businesses are unable to pay back their debts in the long run. Ultimately, many go bust – at which point the big finance-houses simply swoop in to strip and liquidate their assets.

In most cases, this is a win-win for the banks. They can rake in the interest whilst the businesses stagger on, and then sell-off assets to recoup their investment when they don’t. This is the parasitical modus operandi of modern finance capital.

With a global economy choked by overproduction, investment in real production is a mug’s game. Usury, on the other hand, still gives the big capitalists some bang for their buck. Investing in failing, zombie companies is like squeezing the last drips out of a used rag.

Nationalising the losses

This latest round of lending is the most parasitical of all. Given the depth of the crisis, the money-lenders are feeling less secure than usual in recouping their investments.

In order to ‘kickstart’ the economy, the government is backing their loans by promising to cover any debt that turns bad, out of the public purse. As usual, it is a case of nationalising the losses, whilst keeping the profits in private hands.

The government is hoping that, by propping up these businesses, the bosses will continue to pay wages, thereby protecting demand and preventing a vicious downward spiral of depression.

But it is quite obvious what will really happen: the banks will go on an orgy of high-risk lending, and leave the government to pick up the bill. And this bill will then be passed on to the working class by means of austerity.

Any jobs saved in the meantime, just like the companies themselves, will be zombies – kept alive artificially by a drip-feed of credit; and destroyed as soon as that credit runs out.

Socialist plan

Capitalism is an old and sick system. In its youth, such measures might have helped relieve its crises. But just as a dying patient cannot be immortalised with drips and adrenaline, neither can the decrepit capitalist system be saved by credit and stimulus packages.

Instead, the system must be wrested from the hands of the speculating parasites, and planned rationally, under the democratic control of the working class.

This means nationalising the banks and major monopolies, as part of a socialist economic plan. Only then can we ensure that the parasitic bankers and bosses do not continue to enrich themselves at our expense.

Recent economic data brought welcome news for embattled businesses around the world. IHS Markit’s Purchasing Managers’ Index, which gives an indication of whether companies are spending more or less, has risen from its historic lows. So, whereas IHS’s US index was 27 in April and 37 in May, it now stands at 47. That is getting close to the 50 mark, and anything above 50 would indicate expansion, rather than contraction. The figures are similar for other countries, with the index rising for all major economies.

Similarly, the jobs market seems to be improving, with the unemployment rate declining to 13.3 percent in the US from 14.7 percent in April (which was a post-war record). Consumer spending is increasing, and is now only 8.9 percent down, compared to some 33 percent in April. These figures don’t really tell us much about the general health of the economy. A certain recovery is inevitable, given that the lockdown meant an enforced reduction in economic output.

Somehow, the stock markets have managed to rally over the past few weeks, encouraged by the easing of the lockdown and the recent figures. Yet, that merely reveals how divorced the movement of the stock exchange has become from the developments in the real economy. The question isn’t whether the economy will see an increase in GDP, consumer spending etc. after lockdown measures are lifted but how fast and how far the economy will recover. Even with some recovery in the second half of the year, the figures are dire.

The IMF released their World Economic Outlook report on 24 June, where growth expectations were significantly revised downward from their April report (we commented on that report in April). Whereas in April the IMF was predicting a contraction of 3 percent of world GDP, it is now predicting a contraction of 5 percent, which is the worst since the 1930s. According to this forecast, the advanced economies will be worst affected, with a drop of 8 percent; France, Italy and Spain face a 13 percent contraction. The figures are far worse than 2009, which in themselves were a massive shock. This is, as the IMF itself calls it, “a crisis like no other”.

Wishful thinking

However, it is clear from their projections and analysis that the IMF wrongly perceives this crisis to be caused by the coronavirus. Therefore, they also envisage a recovery once the lockdown measures are lifted: basically a return to the kind of growth figures we saw before the present recession. They are predicting 5.4 percent growth of world GDP in 2021, which is almost twice the rate at which the world economy was growing in 2019, and bigger than the recovery in 2010, after the 2009 recession. Basically, the IMF is predicting that the economy will have recovered to its 2019 level sometime by the end of 2021. This idea, that we are approaching something akin to business as usual, regardless of the specifics of the growth figures, must be considered wishful thinking.

A number of factors are now pointing against a quick recovery. At the press conference, the IMF chief economist, Gita Gopinath, was full of confidence in the significant room for manoeuvre in both fiscal and monetary policy. Yet, in reality, the central banks have very limited abilities to stimulate the economy with historically low interest rates. In most advanced capitalist economies, the central bank lending rate is now at zero or just above zero. The only way out is quantitative easing. The ECB pandemic response programme, for example, is already at €1.35tn: almost twice the €750bn originally planned. Right now, consumer and company spending have taken a massive hit and the risk of inflation is limited, but as circumstances change, there is only so much money you can print before you create runaway inflation.

The other lever the state has to try to improve the economy, fiscal policy, is being used even more than during the last crisis. At that time, Gordon Brown proudly announced that the G20 would spend $5tn to stimulate the economy. This time around, the G20 have already announced spending of $10tn, or around 12 percent of GDP. Responding to a Chinese journalist, Gopinath warned that there are limits to how much money governments can spend before it becomes unsustainable. Indeed, without the central banks, particularly the ECB, buying up government bonds, the borrowing of governments would have already hit that ceiling. For the ex-colonial countries with weak currencies, this method is impossible, and 70 countries have already asked the IMF for assistance.

The US budget deficit is forecast to be 24 percent of GDP this year and 12 percent next year, a return to “normal”. The total debt of the advanced economies will be 131 percent of GDP at the end of the year, with the US on 141 percent. How long can this be kept up? As long as the central banks are providing a continuous flow of money, it will be fine, but if that stops, the markets will sour very rapidly. In fact, the economy has been completely addicted to cheap credit, without which it could no longer function.

The problem of state debt

The reality, as Christine Lagarde, the head of the ECB put it last Thursday at a meeting with European Business Leaders, is that: “this is the sharpest and deepest recession ever recorded in non-war time”, after a fall of GDP of 16 percent in the Euro area for the first two quarters of this year. She said recovery will be incomplete; and airline, hospitality and entertainment will probably be hurt irredeemably. She also pointed to the stock exchange volatility index, which although down since April, remains at an elevated level.

At the same meeting, Martin Wolf also gave a sombre assessment of the situation:

“We are going to end up with colossally expanded central bank balance sheets. I think they will be manageable but I think they will be permanent, or at least a very long time. We are going to start looking more like Japan, and that’s pretty big.”

That is to say, quantitative easing is not going away, but is going to be a permanent feature, as the interest rate tool has become useless, and the economy is too depressed in order to allow the central banks to withdraw their assets.

“There is almost certainly going to be permanent economic costs. That is to say our economies collectively and individually will be smaller, probably significantly smaller a few years from now than what we thought they would be back in 2019.”

This has to be considered in the light of the loss already incurred as a result of the financial crisis. In the understated manner of economists, when dealing with the class struggle:

“And already we had suffered a large permanent loss, particularly in the West from the financial crisis and those losses are real and significant and will have to be borne by people, and the question of who bears them will be a central political question.”

And further:

“Public finances will be permanently worse, we will have far more debt and we are going to emerge from this, in my view, with significant structural fiscal deficits. How those are managed and how… those are managed… are going to be central political issues for the future and they are not going to be easy”

That is, how to deal with the debt (i.e who is to pay) will be a central political issue. This is a warning for the ruling class: pay attention to this question. It is reminiscent of the period before the French and the English revolutions, when the feudal state had amassed a vast amount of debt, which it was trying to make the bourgeoisie pay for. But it is not just the state that has accumulated huge debts, as Lagarde pointed out: “The level of debt is massively going to increase, and not just at the sovereign level, but also at the corporate level.”

This presents central banks with a real problem. Interest rates have to remain low. Wolf again puts his finger on the crucial question, when he points out that real interest rates in most major countries are negative and therefore pose no immediate problem for governments. However, if this changes, there will be huge problems very rapidly:

“If there’s a roll-over in the next ten years of most of this [sovereign] debt, at real interest rates of two or three percent, I think we’re going to be in unbelievably big trouble. And therefore, this simply cannot happen.”

The key for him is the governments need to issue 20-to-50-year bonds to lock in low interest rates, but although that might work for the governments of Germany, Britain or the United States, it would not work for Italy and Spain, and corporations and consumers do not, in general, face the same possibilities. So, to keep the economy from going off a cliff edge, the cost of borrowing has to remain extremely low. This is the legacy of the huge amount of debt accumulated over the past 40 years, and the settling of government debt will be an explosive question over the coming years.

COVID-19 still spreading

It seems the financial markets and various commentators thought that the virus problem had now been solved. However, the number of cases in the US has just spiked, following the lifting of lockdown, including in the most populous states: California, Texas and Florida. In most of the south and the west of the country, the rate of infection is accelerating. To avoid infections spiralling out of control, many states now have been forced to reimpose lockdown measures to try to contain the disease. Furthermore, the infection has only gotten started in large parts of the world.

The economic fallout from the virus is not merely an effect of the measures taken by the state, but the spreading of the virus has a dampening effect on consumption regardless. Clearly, people worried about catching the virus will avoid the very same places that authorities could potentially close. As a result, consumer spending in those US states where the virus spreads rapidly have seen consumer spending stagnate or even fall over the past couple of weeks, despite the gradual easing of restrictions. This is also reflected in the number of hours worked, which has been falling since mid-June in a number of US states. So, lockdown or no lockdown, the economy will take a severe hit.

An acute crisis of overproduction

It is testament to the absurdity of capitalism that people not turning up to consume products and services will threaten the whole economy with collapse. In any other society, surplus production would have been something to celebrate, meaning storing up for a rainy day or having spare time, but under capitalism it is a disaster.

It is not just that the bosses are now demanding workers go out to work (most workers continued to work during the pandemic in any case), but they also have to go out to consume. They are very worried that workers are now saving too much, whether from lack of opportunities to consume, or from worrying about the future. Over the course of the pandemic, savings rates have grown by 136 percent in the Euro area.

Unsurprisingly, the worst paid workers are the ones that have been continuing to consume the largest share of their wages. After all, for these workers, very much more money would be spent on day-to-day essentials, like food and housing, and much less on restaurants, entertainment and holidays.

For some decades, Japan has been facing such an ongoing crisis of “too much” savings, and a corresponding stagnating economy (only reaching 1 percent growth, even in booms), as Japanese people simply aren’t spending enough. Martin Wolf commented on this in relation to the crisis that the world is facing:

“Japan suffers from absolutely structurally deficient demand… I think that is quite possibly going to be the global condition so I don’t think it’s inconceivable that we are going to look quite Japanese for a really long time. It is not certain, but it is possible.”

Such a development would spell a period of long-term stagnation for the world economy and, as in the case of Japan, massive state debts, as governments attempt to make up for the lack of demand in the economy. For all their speeches on the virtue of saving for a rainy day, the capitalist system demands that the workers take on an irresponsible amount of debt: it cannot keep functioning otherwise. Should that layer of the working class that has some discretionary spending choose to become more frugal, capitalism is in deep trouble.

The end of globalisation

Ted Grant pointed many times to the role that the expansion of world trade played in the development of the economy after the war. In 1997, he wrote:

“In reality, in this period, the capitalist system went beyond its own limits, through credit, indebtedness, Keynesian deficit financing and so on, and in particular through the development of world trade which partially and for a temporary period permitted the bourgeois to overcome the limits of the nation state.” (‘The First Tremors – An analysis of the global economic situation’)

The two main obstacles to the development of the economy are indeed private property and the nation state, the latter of which was partly overcome by the development of world trade. Although the development was delayed, through a continued massive expansion of credit, the document was correct in the direction of travel, and what would have happen in the event of a slump. It continued:

“However, we now enter into a new and very different period, a period of storm and stress and convulsive crises in the economy, society and politics. All the factors that combined to produce the upward spiral of growth will dialectically turn into their opposite. Above all world trade, which acted as a powerful spur to growth and investment, no longer has the same effect.”

This is precisely what the bourgeois is now afraid is taking place. Lagarde explained: “It is likely trade will be significantly reduced and it is likely as a result that productivity will be impaired unless it is pushed by other factors”. That is to say, international competition leads to investment, which raises productivity. So, unless other factors come into play, and she doesn’t seem to have any suggestions what those factors might be, productivity will stop rising or decline as a result of the fall in world trade.

Martin Wolf agrees with her assessment:

“[W]e are probably going to see a permanent change in the openness of the world economy, a shift against globalisation, at least in terms of things. All sorts of reasons: security, the nature of the economic shock, the rise of protectionism and so on… It is reasonably clear that the world we will re-emerge into… will look really quite profoundly different from the world we thought it would be a year ago or even four or five months ago.”

The coronavirus is having a particularly devastating effect on international trade, but it merely accelerated a development that we have been detailing for some time, including in May last year, when we detailed the protectionist measures taken by the main imperialist powers. Obviously the apologists of capitalism would like to forget that all this was taking place before the coronavirus, in the hope that it might somehow be resolved after the pandemic has passed. Still, as we’ve seen, the more farsighted have to admit that things will not return to the way they were, but they do not draw the necessary conclusions.

The new normal

If you read the comments of politicians, economists and commentators, at least the serious ones, it is clear that we’re entering into a new period. The IMF talks of a “swoosh” recovery, like the Nike logo. Christine Lagarde talks of “restrained” recovery. What they can all agree on is that the recovery is not going to be swift, and that things will not go back to the way they were even six months ago.

With every new blow to the world economy, we’re asked to lower our expectations of what capitalism can achieve. Now, Martin Wolf talks of a global situation like that of Japan, with chronically low growth, so low it is difficult to distinguish from stagnation. For one country to go through that is bad enough, when it’s the whole world economy, it’s a disaster.

Capitalism can only justify its existence by constantly developing the productive forces, by constantly developing productivity: by raising the productive potential of the economy. It really is otherwise a blatantly bankrupt system, as John Maynard Keynes recognised when comparing it to the Soviet Union in the 1920s. It could only maintain itself by seemingly constantly being able to provide better standards of living, at least in the imperialist countries.

Now that is finished. The handling of the pandemic has been a calamity, with over half a million dead, as government after government prevaricated about implementing measures, and the situation is still getting worse. But the economic system hasn’t just been incapable of preventing the infection from spreading, but has also prepared a quite avoidable economic calamity.

Capitalism can give nothing to the working class, except cuts. Now, mass unemployment is knocking on the door, starting in the service sector. Employers are going to ask workers to accept cuts to their terms and conditions in order to save ailing (and not-so-ailing) businesses. At the same time, what remains of the welfare state is going to come under relentless attack as governments attempt to repay the vast debts that governments are accruing by propping up the system. This will inevitably provoke an unprecedented wave of class struggle, which will put into question the capitalist system as a whole. It will pose the question clearly: socialism or barbarism. And that is the choice before humanity.

The UN’s World Food Programme has issued the dire warning that the world stands on the brink of a famine of “biblical proportions”. The UN thinks that at least 265 million people are being pushed to starvation as a result of the coronavirus crisis.

This is not because of a bad harvest; in fact, harvests have been good. It is entirely down to the severe economic crisis and dislocation in the world economy.

Capitalism to blame

Healthcare systems in impoverished and exploited countries will not be able to cope with the virus, and huge numbers will die. Social distancing will be impossible in such countries. Lockdowns pose an enormous barrier to the distribution of essential food in remote areas.

But this is far from being an unforeseeable biological disaster that has nothing to do with capitalism. Regardless of coronavirus, billions of people in the world can only eat if they get a wage – and even then they remain malnourished.

The economic chaos engulfing the world will lead to hundreds of millions going without a wage for a long time. Remittances from relatives working in richer countries will also dry up. In these conditions, it is not only those in remote areas, but millions in cities also who will face starvation in the next few months. The swelling ranks of refugees are in particularly desperate need.

Once the virus is finally defeated, we will be left with long-term economic damage, as well as many years of extreme austerity, due to the irrationality of capitalism. Protectionist policies will be increasingly pursued by world leaders, and institutions like the EU could break up amid mutual recriminations.

This will lead to years of economic crisis, uncertainty, and suffering – far worse than what was seen after 2008.

World poverty

The report from the UN mentions – without passing comment – that the figure of 265 million on the brink of starvation represents a doubling of the number before the virus spread. That is to say, without any unexpected virus ravaging the world, over 130 million people were already on the brink of starvation, two decades into the 21st century.

The head of the World Food Programme, David Beasley, “was already saying that 2020 would be the worst year since the second world war, on the basis of what we forecast at the end of last year.”

Recent years have seen the rise in a school of thought known as the ‘New Optimists’, celebrated by the likes of Bill Gates and making frequent appearances on TED Talks. They smugly explain that the world is relentlessly becoming a better place. People everywhere are getting richer; life expectancy is growing; and this will somehow just continue if we leave the ‘free market’ to do its job.

Their ideas were always rubbish, concocted out of cherry picked statistics and misleading averages masking growing inequality. What this crisis reveals is that capitalism is not making the world a better place. It is polluting and starving the planet.

Socialism or barbarism

The situation is so dire that the head of the UN’s World Food Programme is obliged to describe the situation facing humanity as ‘biblical’ – that is, as like an event from a 2,000 year old myth; from the era of the wooden plough and the crucifix.

In the year 2020 – more than fifty years after we put a man on the moon, in an age of ubiquitous smartphones and the ability to produce food for 10 billion people – we are being driven back to the time of the Bible.

That is the concrete meaning of Rosa Luxemburg’s famous and entirely correct statement that “Bourgeois society stands at the crossroads, either transition to socialism or regression into barbarism.”

Lenin also famously remarked that “capitalism is horror without end”. We are fighting against the capitalist system and its barbarism. We are fighting for socialism – the only way out for humanity. Join us!

Capitalism threatens mass starvation

Oliver Brotherton

A new WFP report begins bluntly, stating that we are now entering a period of global economic and social crisis, the likes of which have not been seen since the Second World War. Imperialism is driving ongoing wars in the Middle East, leading to humanitarian crises that are only worsened by growing economic instability in many countries in the region. Similarly, many African countries such as Sudan and Ethiopia are being hit by what the report describes as a ‘perfect storm’ of economic downturn and social instability, which is sweeping across the region. In addition, natural disasters, such as the current desert locust swarms spreading throughout countries such as Kenya, Uganda and Tanzania are threatening the livelihoods of over 25 million people. As a result, the WFP has found that over 821 million people around the world are ‘chronically hungry’ with a further 135 million on the brink of starvation.

Furthermore, into the chaos of war and economic turmoil comes the impact of the current coronavirus pandemic. The WFP statement suggests that the number of people facing starvation in the next few months is likely to double (to over 260 million) as a result of economic and health impacts of COVID-19. Perhaps the most shocking revelation, however, was the UN’s worst-case scenario prediction of over 35 countries experiencing widespread famine in the coming period. This would involve thousands of people starving to death every day, primarily in the world’s most conflict-ridden areas. The predicted growth of famine and hunger comes not just as a result of natural disaster and disease, however. The WFP report states that there is a ‘real danger’ that the death toll from the economic impact of the coronavirus will be higher than that from the disease itself. The global drop in overseas aid has already hit countries such as Haiti, Nepal and Somalia, where the worst-off are reliant on donations from charities in wealthier countries to survive. Collapsing tourism is worsening economic crises across the world, particularly in countries like Ethiopia, where it accounts for almost half of total exports. These are countries where the exploitation of the working class by imperialism and by their own ruling class is at an extremely high level. The economic catastrophes being engendered by the current pandemic will only worsen their position, as the ruling class seeks to protect its profits and to offload the burdens of crisis onto the workers.

A long-brewing crisis

Crucially, this report shows more clearly than ever that the current global crisis has been building for a long time before the outbreak of COVID-19. Hunger, poverty and conflict were already widespread, particularly in Africa and the Middle East, and the unexpected pressure of lockdown has only added fuel to the fire. With thousands expected to die from the virus and its broader economic impact, as well as many more made unable to work, the pandemic has accelerated a process of economic and social decline that was already in motion. This ‘perfect storm’ of poverty, economic downturn, social instability and now lockdown is expected to cripple economies across the world, with added complications such as the collapse in oil prices meaning that many of the world’s poorest nations are now struggling for economic survival.

But these crises are not unavoidable. They are the direct result of the capitalist system, which is driven solely by the quest for profit. The capitalist class is unable to provide a way out. Current research shows that global food production right now is capable of meeting the requirements of almost 10 billion people, which could satisfy the projected world population for another 30 years. And yet, billions of people live on the edge of starvation. These are the realities of an economic system which values profit rather than food distribution.

In a world of growing humanitarian crises, the need for economic planning and a rational distribution of the worlds’ resources has never been clearer. The funding and donations of the WFP, while they have grown to become a necessity for much of the world, represent a plaster on a gaping wound. Should these donations dry up, a likely scenario in the next period, over 300,000 people could starve to death every day. This is not a sign of a healthy economic system. Indeed, in the coming crisis, capitalism will not even be willing to afford this meagre measure, when faced with economic turmoil. The millions of deaths that are likely as a result of the fallout of COVID-19 and the deepening crisis of capitalism will be a direct consequence of the capitalist system.

The statistics stated in the WFP report are a damning condemnation of capitalism, which is not even capable of feeding vast sections of humanity. The global coronavirus pandemic will mean a qualitative change for the worse for millions of people around the globe, while the ruling class will shield itself. Under capitalism, it is the working class who carries the weight of a crisis, while the ruling class reap the profits of a success. In the case of starvation and famine, this is truer than ever. Rather than running the economy to meet the growing needs of the working class, the bosses will only act in their class interests, which are based on protecting their profits and privileges. Only an economy planned to meet the needs of those who maintain it can be trusted to prevent famine and mass starvation. Capitalism is not fit for purpose. Only socialist measures will be able to tackle the barbarism that will come.